Verizon Business Revenue Declined More than 3% in 2023

Verizon remains "laser-focused" on mobility as the company seeks to improve business wireline profitability.

Verizon Business revenue for the fourth quarter of 2023 added up to $7.6 billion. That number declined 3.6% from a year prior, with Verizon pointing to decreasing wireline and wireless equipment revenues. Verizon Business revenue for 2023 decreased 3.1% year-over-year, to $30.1 billion, the company reported in its earnings release on Tuesday.

Those challenges on the wireline side, which carriers such as AT&T and Verizon have consistently reported in recent years, contrast with positive business wireless results Verizon is driving. Business wireless service revenue grew 3%, to $3.4 billion, for the quarter, and 4.1%, to $13.4 billion, for all of 2023. Fixed wireless access (FWA) are the star of the show, with Verizon adding 144,000 subscribers in the fourth quarter.

"Looking ahead, our priorities for 2024 are crystal clear. We remain laser-focused on growing wireless service revenue and expanding our adjusted EBITDA and free cash flow to allow for a meaningful debt reduction in the year ahead," Verizon CEO Hans Vestberg told investors.

The New York-based carrier posted a total operating revenue of $134 billion for all of 2023, down a little more than 2% year over year. Its stock was up more than 6% Tuesday on the news.

Related:As AT&T, Verizon Detail Cost-Cutting Measures, Partners See Opportunity

Verizon Business Revenue

The earnings came less than a week after Verizon disclosed in an 8-K SEC filing that it was revising its five-year projections for its Business unit. The company is taking on a $5.8 billion impairment charge, concluding the "fair value of the Business reporting unit was less than its carrying value." The Verizon business unit reported $1.7 billion in remaining goodwill as of Dec. 31, 2023.

Verizon's Hans Vestberg

Telecoms.com, a Channel Futures sister company, points to the shift from MPLS to SD-WAN that is eroding overall prices. While many telcos have partnered with SD-WAN vendors over the years to integrate MPLS and SD-WAN, MPLS has still been making a gradual decline.

“For the life of me, I can’t figure out – other than the perpetuation of the technology by vendors – why companies should stay with MPLS,” C3 Technology Advisors president Matthew Toth told Channel Futures in 2018.

IDC noted a little more than a year ago that 46% percent of businesses had transitioned to SD-WAN.

Vestberg in Tuesday's earnings call pointed to macroenomic pressures in the telco world as well as increasing operational expenses. Carriers have faced increasing costs to maintain legacy copper services that customers use less often.

"We have the secular decline, and we've had that for quite a while," Vestberg said. "So, there's nothing new and nothing new to that story. But our cost efficiency is, of course, happening very, very quickly, and the team is doing a great job."

Vestberg said Verizon Business formed a partnerships with the consultancy HCLTech for post-sale implementation and customer support in its managed network business. He also cited "establishing a regional distribution model" as a key move Verizon made in 2023.

He also pointed to increased selectivity in the business segment.

"... We also see that we have the right pricing for our customers and have also seen where we don't have great contracts, we have decided to walk away from them," he said.

He said his team feels "super excited" about the rapid growth of fixed wireless access.

"We expect this will be a long-term source of recurring revenue for Verizon, and we're entering this year with a strong base for continued growth," he said.

Partner Perspective

Verizon in a year-end 2022 survey of nearly 150 partners found that overall satisfaction range ranged from 6 to 8.7 out of 10, with the type of partner program impacting the score. For example, business wireless-focused partners registered an satisfaction average 8.5 for Verizon. This includes Verizon's Mobility Co-Sell Program members, who laud the lead sharing Verizon provides to them, and wireless-focused agents.

Wireline-focused agents have reported challenges from navigating the internal systems of a large telco. Mississippi-based technology advisor BB Telco helps its customers source dedicated fiber solutions from carriers in the technology services distributor portfolio. President Craig Bullock said regional availability and pricing challenges have made it rare for him to refer Verizon.

BB Telco's Craig Bullock

"We frequently encounter new construction projects in Verizon's service areas; however, obtaining a price quote from them is challenging. We must gather comprehensive client information, which is typically only needed after receiving a quote from other carriers," he told Channel Futures. "Moreover, Verizon often inaccurately quotes fiber connection costs, leading to price increases after orders are placed. This results in uncomfortable situations where we must inform customers about unexpected cost escalations. Due to these repeated issues, we usually caution customers upfront about the difficulties in obtaining a quote from Verizon, suggesting them only as a last resort."

Fios business internet increased from 373,000 in Q4 2022 to 385,000 in Q4 2023.